EUR/AUD Strategy: A Top in Place Below the 1.57 Figure?
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- Trading Strategy: Short EUR/AUD at 1.5640
- Euro may be preparing to turn lower after hitting 2-year high vs. Aussie Dollar
- Short trade initially looks for a test of Fibonacci support below the 1.56 figure
The Euro may be preparing to reverse course downward after rising to the highest level in nearly two years against the Australian Dollar. Prices have put in a bearish Evening star candlestick pattern following a test of channel resistance. Negative RSI divergence bolsters the case for a downside scenario.
Near-term support is at 1.5512, the 14.6% Fibonacci expansion. A break below that confirmed on a daily closing basis initially opens the door for a challenge of the 23.6% level at 1.5397. Alternatively, daily close above the November 27 high at 1.5697 would invalidate the bearish setup.
The technical evidence coupled with acceptable risk/reward parameters appeared attractive and a short trade has been activated at 1.5640. The first objective is at 1.5512. A stop-loss will be triggered on a daily close above 1.5697. Half of profit will be booked and the stop trailed to breakeven on hitting the first target.
Just getting started trading the Euro and the Aussie Dollar? Check out our beginners’ guide!
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